There are over 21 million Point of Sale (POS) physical and mobile seller (also referred to herein as “merchant”) systems that support cashless transactions valued above approximately $10. For the purposes of this application, the term POS refers to the physical site at which a good or service is provided to a buyer. Most of these physical merchant site systems are designed to accept magnetic cards as the interface media for the banking entity (MASTERCARD, Loyalty cards such as MACY'S, etc.) and the consumer. The costs of a typical transaction includes the approximate cost of 10 cents for a wired dial-up connection and approximately 50 cents or 2% of transaction costs for the credit card clearing house that routes requests and provides transaction records.
There are also millions of automated manned or unmanned vending machine type devices that accept cash, credit/debit cards, or tokens. These automated financial transaction machines include public transportation ticketing machines, liquid and food dispensing machines, car wash, and gasoline pumping system machines, among others. These automated machines accept typical transaction values of between about $0.01 and $30.00, and typically do not directly support existing credit card and/or credit transaction devices. There are also many merchants that require highly mobile POS systems for small value transactions and include ice cream vendors, entertainment venues, and entertainment ticket re-sellers.
A problem exists as the present industry schema of existing credit cards may preclude financial transactions for amounts of less than $30, and more typically less than $10. These small financial transactions are typically referred to as “micropayments.” Some reasons associated with reluctance to support micropayments utilizing the existing credit card schema include, but are not limited to, high processing charges, communications charges, credit transaction insurance, equipment infrastructure, clearing house fees, transaction processing time, etc.
A problem also exists when the merchant point of sale is highly mobile and unable to connect with a telephone network for micropayment processes, even if such micropayment processes are available. Problems associated with a highly mobile POS are exacerbated by the length of transaction processing time, and issues relating to transaction privacy, security, and validation.
One possible solution to the problem posed by micropayments is the loyalty credit card process. This process requires credit worthiness of the customer and allows small purchases to be charged to the store issued loyalty card with processing of the transaction is performed by the store or a contracted third party. MACYS and NORDSTROMS are examples of such retail companies supporting micropayments with their loyalty cards. However, the loyalty cards are typically store-specific and not transferable to other merchants.
Another possible solution is the pre-pay micropayment card process. This process requires the customer to prepay a specific amount upon issuance of the card. The card will then be used in a transaction associated with the issuer that does not require user validation and authorization, nor does it offer billing, transaction tracking services, or credit services. Telephone cards and transportation cards are examples of such entities supporting micropayments in a pre-pay process.
Another possible solution is the micropayment debit card process. This process requires the customer to qualify for credit upon issuance of the card. The micropayment debit card will then be used in a transaction associated with the issuer that may require user validation and authorization. Telephone calling cards linked to the user's existing telephone account are one example of an entity supporting micropayments in a credit process.
Yet another possible solution to the micropayment issue is the token processing process. This process requires the customer to purchase tokens for use in specific automated equipment or at manned point of sales. Circus entertainment tickets and car wash facilities are examples of such entities supporting token-based micropayments.
There is also a trend towards greater numbers of automated vending systems and unmanned point-of-sale equipment and systems typically requiring prepayment in exchange for tokens. The unique requirements of each specific equipment and systems has created many standards that require cash payment and do not offer conversion for remaining tokens, nor provide transaction receipts.
Therefore, there is a need in the art for methods and apparatuses which allow for a micropayment to be made utilizing electronic media in a convenient and economically viable and secure fashion.